China-backed fund to acquire Xcerra for $580 million

A unit of a large China-based semiconductor investment fund has agreed to acquire U.S. semiconductor testing company Xcerra Corp for $580 million in cash, the companies said on Monday.

The move comes after the Committee on Foreign Investment in the United States (CFIUS), a government panel that reviews acquisitions by foreign entities for potential national security risks, has cracked down on technology deals related to the semiconductor industry.

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Chinese suitors have faced intense scrutiny from regulators in their pursuit of U.S. chip makers, resulting in some failed deals in recent years.

The buyer is Unic Capital Management, a subsidiary of Sino IC Capital that was founded last year, according to the news release. Sino IC Capital was established in August 2014 and has approximately RMB 138.7 billion ($20.9 billion) in funds under management to invest in the semiconductor space.

Xcerra, based in Norwood, Massachusetts, designs and manufactures equipment to test semiconductors and circuit boards. It does not make semiconductors, according to the news release.

The deal is subject to CFIUS approval and is expected to close by the end of the year.

"Sino IC Capital and Xcerra will work closely together with regulators, in an open and transparent manner, as they evaluate the merits of the transaction," Jun Lu, president of Sino IC Capital, said in a statement.

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Unic is paying $10.25 per share in cash for Xcerra. Xcerra shares were trading at $9.69 at midday on Monday, up about 8 percent. That was still below Unic's offer price, which indicates some market skepticism about the deal closing.

Xcerra is able to seek other buyers for next 35 days in a so-called go-shop provision of the merger agreement.

Xcerra was advised by Cowen and Company LLC and Latham & Watkins LLP. Sinoc IC was advised by Grant Thornton International and Wilson Sonsini Goodrich & Rosati.